Hurricane Season and Insurance Coverage: Questions & Answers

Tropical weather is heating up! Now that we are in the thick of hurricane season, you may be wondering about disaster insurance: if the worst happens, am I covered?

Greg Raab, manager of integrated services at Utica, New York based Adjusters International and board member for the National Association of Public insurance Adjusters, is an expert in disaster recovery consulting and insurance adjusting with a focus on FEMA-claims. He says homeowners, particularly those who live along the coast, often underestimate the amount of coverage they need. "Your coverage should reflect the true cost of rebuilding your home, taking into consideration that the cost of construction can increase post-hurricane as the demand for materials and a qualified construction company rise." Raab advises.

" Also make sure you have adequate coverage for additional living expenses, preparing yourself for a potential lengthy stay in temporary housing post-hurricane due to the scarcity of materials, available firms to complete the various stages of construction, and potential infrastructure damage to roads, power, etc., that may delay your project."

Here are more answers from Raab on the topic:

1.) Can you make changes to your insurance policy mid-year due to weather?

Typically you should review your policy annually to make sure you are fully covered for the cost of rebuilding your property in the event it is completely destroyed. A change mid-year should be carefully reviewed with your insurance agent or broker, as it may require cancellation of the existing policy, refunding paid premiums or catching up on premiums due. There may be a penalty involved from some insurance carriers for not carrying the original policy to term, though it may be a small price to pay if you truly feel your current coverage is leaving you at risk.

2.)What do you recommend in terms of taking pictures or shooting videos of your property in advance to help successfully file a claim?

A great tool to use when putting together an insurance claim is a video or a collection of labeled photographs of the property and personal belongings assembled prior to the disaster, and storing off premises. Unfortunately, very few policyholders complete this step. Following a disaster, a helpful tool is to contact family and friends to gather photographs taken at your home taken during holidays or special events. These photographs may show many of the finishes and belongings in various rooms of your home as evidence when putting together your damage assessment.

3.) Documents can get destroyed during a natural disaster. How do you advise people (both renters and home owners) to make sure their insurance policies are secure?

One way for a homeowner or renter to secure their insurance policies pre-disaster is to store a copy outside of the home in a safe deposit box or with a relative. With today's technology, scanning the policy and storing it electronically on a thumb-drive or in the "cloud" is convenient. Regardless, after a disaster the policyholder should request a complete copy of the policy from the carrier or agent, making sure to fully understand all of the rights and obligations contained therein.

4.) What kind of preparation/protection should those with businesses in hurricane susceptible areas make?

For businesses, there are many issues to consider, such as overall coverage limits, code upgrades, business interruption, and extra expense coverage. Businesses need to have adequate coverage for the potential for a steep decline in income post-hurricane, from factors like damage to the business itself, a decrease in customer demand as people are displaced and dealing with their own damage issues, and difficulty getting supplies or raw materials. There are contingent business interruption policies available as well, which could pay huge dividends if catastrophic damage occurs to a supplier or key customer(s) via a hurricane or other event. Extra expense coverage can provide immediate funds to get a business back on its feet at a current or temporary location. There are also newer vehicles like parametric policies to discuss with your agent, which may offer additional coverage for economic damage from large-scale events.

For both homeowners and businesses, it is important to note that windstorm coverage often comes with a much larger deductible, often a percentage of total coverage, which makes overall coverage less affordable. In addition, hurricanes often involve multiple perils like wind, wind-driven rain, flood, etc., that can happen simultaneously, complicating the insurance recovery. It is important to know all of your policies in detail, and identify any gaps in coverage, such as the lack of a flood policy to cover water damage excluded from your primary building policy.

5.) Why do those who own older homes have additional insurance concerns to be aware of?

Older homes may warrant the need for an insurance upgrade. However you should discuss code upgrade coverage with your agent. This is especially important if you own an older home. You may be required by your community's current set of codes to rebuild or repair your home differently (and often times much more expensively) after a disaster. For example, your wiring may need to be upgraded, two-by-fours may need to be upgraded to two-by-sixes, building materials may need to be more fire resistant, etc.

6.) After a hurricane, when it's time to make repairs what are common mistakes people make regarding their insurance coverage in the rebuilding process?

One mistake many policy holders make is not using the insurance policy as a roadmap in the decision-making process. We have seen policyholders sign contracts, and begin processes such as damage mitigation and structural repair without knowing what is and is not covered by the insurance policy. As a result, policyholders have suffered a preventable financial loss on the heels of their physical and emotional loss from the disaster. Knowing your insurance policy inside and out is so important. The insurance policy is designed to make the policyholder "whole" after a disaster, meaning putting them back to pre-loss condition. However, there are rules to follow, and policyholder responsibilities that must be met along the way. Don't be afraid to ask for help from your agent, public adjuster, attorney, or other trusted source to navigate through your recovery.

Another mistake policyholders fall victim to after a disaster is not factoring in the emotional and physical toll a disaster can take on the people involved. Sever damage to your home, often coupled with temporarily relocating your family, can be extremely stressful. You may need to balance measuring and documenting your insurance claim with finding temporary housing, purchasing essential items that were lost, making arrangements for child care and transportation, interviewing contractors, and keeping up with your work schedule which may include extensive overtime if work was hit with the same disaster.